Coal India surges 2% on strong Q4 earnings; brokerages raise price target

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Global brokerages remained bullish on the stock and raised price target after solid earnings growth reported by the state-owned company.





Coal India shares rallied 4 percent intraday on May 31 as global brokerages remained bullish on the stock after the fourth quarter earnings beat analyst expectations.

The stock was quoting at Rs 258.30, up Rs 5.40, or 2.14 percent on the BSE at 10:04 hours. The scrip has rallied 13 percent in the last three months.

The country's largest coal mining company beat on earnings front due to its strong realisations.

Fuel supply agreement realisations came in at Rs 1,460 per tonne against CNBC-TV18 poll expectations of sub Rs 1,390 per tonne, as FSA sales are 87 percent of total sales volumes. E-auction realisations were also good at Rs 2,754 per tonne against expectations of sub Rs 2,700 per tonne.

Profit in March quarter grew by a whopping 363 percent year-on-year to Rs 6,027 crore; revenue increased by 7.5 percent to Rs 28,546 crore.

At operating level, earnings before interest, tax, depreciation and amortisation surged 4,122 percent to Rs 8,211.9 crore and margin expanded sharply to 28.77 percent against 0.73 percent in the corresponding period of last fiscal.

Numbers were ahead of analyst estimates as CNBC-TV18 poll estimated profit at Rs 5,175 crore on revenue of Rs 27,250 crore and EBITDA at Rs 7,350 crore with margin at 27 percent for the quarter.

Global brokerages remained bullish on the stock and raised price target after solid earnings growth reported by the state-owned company.

Here is what the brokerages said after Coal India's Q4 earnings:

Brokerage: CLSA | Rating: Buy | Target: Rs 290 | Return: 15%

We maintain buy rating on the stock and raised price target to Rs 290 from Rs 275 earlier as the stock is at a reasonable 10x FY20 PE with an attractive 8 percent dividend yield.

Coal India is a defensive play amidst global headwinds in the resources sector.

The fourth quarter EBITDA was higher than the estimates, led by better-than-expected realisations.

We see a flattish EPS over FY19-21.

Brokerage: Citi | Rating: Buy | Target: Rs 320 | Return: 26%

We have a buy call on the stock and increased price target to Rs 320 from Rs 300 as the company offers an attractive dividend yield.

We value the company at a premium given resource base & limited exposure to global volatility.



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